Strategic focus of incumbents in the European telecommunications industry: The cases of BT,Deutsche Telekom and KPN

This study investigates the internal and external strategic choices that telecommunications firms, operating in a dynamic network environment, make to adapt to changes and to respond quickly in order to create or to sustain their competitive advantage. In particular, in the European telecommunications industry incumbent firms have faced important challenges from new technologies, liberalization and the convergence of markets. The leading European telecommunications companies initially focused on new markets and new businesses, emphasizing their plans to become major players in relevant markets. However, after the telecommunications euphoria companies were more restrained due to their huge burden of debt and their market value. Through refocusing or restructuring, these companies have tried to streamline their businesses in order to restore their value and to improve their competitiveness. Insight into the specific strategic actions of traditional telecommunications companies in Europe to the recent developments in the industry is provided from the analysis of three leading traditional telecommunications companies: BT, Deutsche Telekom and KPN.     

Korean telecom policy in global competition: implications for developing countries

United States efforts to open the Korean telecommunications market have been incessant and tenacious, to the extent that Korea is the only country to be twice designated by the US as a priority foreign country (PFC). Through major restructuring driven by the Korean government, the telecommunications infrastructure of Korea has been strengthened and expanded, and in the process has posed a threat to the US telecommunications industry. Thus, since the late 1980s, the Korean telecommunications industry has been monitored and threatened with trade sanctions by the United States Trade Representative, and all internal restructuring has been closely related to bilateral negotiations with the US, and multilateral negotiations in the Uruguay Round. Based on interviews with key Korean telecommunications personnel and analyses of public documents, this research examines the Korean telecommunications market, telecommunications policies relative to the US and WTO, and the recent economic crisis that has affected the stability of the industry. The paper also offers five major recommendations to government and industry policymakers, including a more active and positive stance toward liberalisation, the relinquishing by bureaucrats of their monopolistic power over policymaking, the securing of an open and transparent policymaking process, and, in relations with the US, and the mobilisation of regional and multilateral organisations to ensure fair competition in telecommunications.     

How value and trust influence loyalty in wireless telecommunications industry

Despite making significant investments in enhancing the customer service experience, long-term customer loyalty remains an elusive dream for many service providers. Particularly in the telecommunications industry, switching providers even from within continuous contract relationships is easy and companies struggle to retain their customers. Trust and value are considered cornerstones of long-term relationships, so it is perhaps surprising that previous research on how relationship age and usage level actually affect value, trust and loyalty is inconclusive. The current research is set in the telecommunications services field and draws on a large-scale survey undertaken in Finland. The findings support the contention that perceived value relates positively to loyalty, and that trust mediates that relationship. Surprisingly, in the telecommunications industry, increasing relationship age and usage level strengthen neither value and loyalty nor the links between trust and loyalty. The results may be explained by the unique characteristics of the highly competitive mobile telecommunications sector, and confirm the view that loyalty does not pay without strategies that value long-term customers and thereby build trust with new customers.     

Regulation and innovation in the telecommunications industry

This paper aims to introduce issues that relate regulation and innovation in the telecommunications industry. We try to address the following question: which types of regulatory schemes are likely to promote innovation in a fast-growing telecommunications industry? Section 2 analyses ex ante control by sector-specific regulation and ex post control by competition policies. Section 3 deals with the importance of compatibility hence regulation of standards in the telecommunications industry. Section 4 discusses the major issues pertaining to the relation between innovation and pricing on the one hand, and innovation and unbundling on the other.     

Does corporate social responsibility influence the corporate performance of the U.S. telecommunications industry?

This study uses a two-stage approach to explore the relationship between the operational performance of U.S. telecommunications companies and their implementation of corporate social responsibility (CSR). In the first stage, this study adopts the dynamic data envelopment analysis model to measure the efficiency of the telecommunications industry in the U.S. from 2004 to 2008. The empirical results show that the corporate efficiency of those companies that implemented CSR was higher than that of those companies that did not. In the second stage, the study adopts OLS and 2SLS to explore the influence of the execution level of CSR on performance. The results show that the Kinder, Lyndenberg, and Domini & Co (KLD) social ratings indexes are significantly and positively related to corporate performance. Finally, this study suggests ways in which corporate policy makers can enhance CSR in order to improve corporate performance in the U.S. telecommunications industry.     

Convergence and unbundling of corporate R&D in telecommunications: is software taking the helm?

This paper presents a view of the changing structure of corporate R&D in telecommunications – one that is close to Adam Smith’s insightful and enduring idea of division of labor – that perhaps we are witnessing the beginnings of vertical disintegration and unbundling of important segments of the industry’s R&D activity. The paper maintains that the emergence of an independent software industry – aided by the convergence of computer, telecommunications and imaging technologies – and the rapid growth of technology-based alliances are at the heart of this trend. So extensive is the vertical disintegration of R&D that, in 1997, the top 10 independent software vendors in the US spent more on R&D than the combined spending by AT&T and Lucent whose sales were well over three times as large. It appears that the source of future innovation in the telecommunications industry lies not in its services segment but rather in telecommunications and Internet equipment firms and independent software firms. Increasingly, the fortunes of large service providers like AT&T will depend less on innovation and more on their ability to configure and market complete one-stop-shopping solutions to customers by combining internal resources with outsourced technologies, products and services.     

英国电信产业的放松管制和对主导运营商BT的再管制

自 1 980年起 ,英国电信产业先后实施了邮政、电信分离 ,建立独立的管制机构 ,对开放市场准入和私有化以后仍然居于主导地位的运营商———英国电信公司 (BT)实施包括价格上限管制在内的一系列管制 ,促进了英国电信产业向竞争性结构的转化。目前 ,我国电信产业同样面临着放松管制以及放松管制以后如何重组和再管制主导运营商的棘手难题。本文拟对英国电信产业 2 0余年的改革经验进行比较系统的回顾和评析 ,以期对我国电信产业的下一步改革有所启示。     

Complexity in the telecommunications industry: When integrating infrastructure and services backfires

The emergence of pure Internet-based service providers has put many integrated telecommunications firms - industry incumbents that provide services on their own infrastructure - under massive pressure. While various pure service providers enjoy high performance, the products offered by the incumbents often cannot compete on either price or user experience. Conventional wisdom, however, might suggest the opposite: that coordinating both infrastructure and services might allow the incumbents to reap synergy effects and create superior products. To address this issue, this paper applies a complex systems perspective to the telecommunications industry. It conceptualizes telecommunications firms to be searching for good configurations of interdependent service and infrastructure activities that need to fit together to achieve high-performing product systems. Using a simulation model, the paper shows that integrated operators can indeed take advantage of the interdependencies between the infrastructure and the service domain, resulting in superior product performance. Integrating infrastructure and services, however, can backfire: because learning about both domains and their interdependence requires more time, performance in the short run will be lower than that of pure service providers that can focus on adapting their service-related activities to an infrastructure that is beyond their control. The paper characterizes the conditions under which these effects can arise and concludes with implications for management and policy.     

Telecommunications reforms in China: towards an analytical framework

This paper reviews and analyzes changing telecommunications policies in China since the inception of the so-called “Open Policy”. It is argued that these changes should be understood as the results of a delicate balance between (1) government considerations (including the state's desire to provide universal coverage, control the telecommunications industry and, more recently, improve the efficiency of state-owned enterprises), (2) the call from foreigners (sometimes made through their governments) to open China's telecommunications industry and to seek profits, and (3) the overwhelming demand of the Chinese population and the business sector (including foreign firms operating in China) to have freer and more rapid movement of information. Over time, the interplay of these forces has led to the liberalization of China's telecommunications industry. These moves towards liberalization took place in four stages. During stages one (Pre-1994) and two (1994–1997), only half-hearted reforms were introduced to separate government administration from business enterprises and to foster very weak domestic competition. During stage three (1998–1999), there were reforms to the regulatory framework and measures towards liberalization. From 2000 onwards, a solid legal foundation was laid after nearly a decade of gradual reform. Moreover, there has been some remarkable organizational restructuring since June 2001.     

The influence of regulations on the efficiency of telecommunications operators: A meta-frontier analysis

The telecommunications industry has a great ripple effect on the overall national economy. However, there is no consensus about what is the optimal regulation policy for the telecommunications industry. Regulations on the telecommunications industry are different by region (i.e. United States, European Union and Asia). A number of studies have been conducted on comparative efficiency analysis for different policies that apply stochastic frontier analysis or data envelope analysis. However, these comparative studies are inappropriate because the production functions for each region are not identical. Thus, this paper addresses meta-frontier methodology, which can reflect differences in production functions. The results indicate that the United States has the highest meta-frontier efficiency in contrast to previous research findings.     

Telecommunications technology applications and standards : A new role for the user

Telecommunications is at a critical juncture in the development of technology, policy and industry structure. The industry is becoming increasingly global and competitive; technology is developing faster than it can be implemented; and telecommunications is becoming strategically important to user organizations. Regulatory bodies and standards organizations are struggling with these developments. Public policy that encourages both competition in the telecommunications industry as well as the organized participation of users in the development of new technology applications, technical standards and industry regulations is essential for realizing the prospective benefits of the information age.     

New Product Strategy, Structure, Process, and Performance in the Telecommunications Industry

A continuous flow of new products is the lifeblood for firms that hope to remain competitive in high-technology industries such as telecommunications. Faced with rapidly shrinking product life cycles, these firms must aggressively pursue the quest for more effective new product development (NPD). Ongoing success in such industries is dependent on choosing the right mix of new product strategy, organizational structure, and NPD processes. Rather than considering the interrelationships among these success factors, however, most previous studies of NPD have examined these issues individually. This shortcoming is compounded by the fact that past studies of NPD have typically cut across industry lines. Gloria Barczak addresses these problems by proposing that a firm's choice of new product strategy, structure, and process are interrelated, as are the effects of those choices on NPD performance. Because these choices and their effects also may be dependent on the unique characteristics of the industry in which a firm competes, her study focuses exclusively on firms in a specific, high-technology industry, telecommunications. The study finds that no single NPD strategy, in and of itself, stands out as being better than any other for the telecommunications industry. Instead, it appears that a company's focus should be on ensuring the best possible fit between its chosen NPD strategy and its corporate goals and capabilities. In keeping with the current focus on cross-functional teams, the study results indicate that project teams and R&D teams are the most effective means for organizing NPD efforts in the telecommunications industry. Perhaps not surprisingly, R&D teams are more important for first-to-market firms than they are for fast followers and late entrants. An R&D team provides the technical skills necessary for playing the role of pioneer. Regardless of the firm's NPD strategy and structure, the presence of a product champion is an important element in the success of new product efforts. In an era of rapid, technological advances, idea generation and screening efforts are essential to the success of telecommunications firms. To ensure that they do not fall into the trap of introducing technology for technology's sake, pioneering and fast-follower firms in particular must recognize the importance of staying in touch with their markets. Such market-oriented activities as customer prototype testing and concept definition and testing can help these firms ensure that their technological developments are in line with customer needs and requirements.     

Telecommunications privacy and the information society

Determining the appropriate actions to insure telecommunications privacy in the domestic telephone system presents unusually complex and interrelated considerations of law, technology and foreign policy. In this article, the author explores these considerations as they pertain to possible future telecommunications policy options for the government in its relations with the privately owned and operated telecommunications industry in the USA.     

US telecommunications regulation: Will technology decide?

Twenty years ago, the telecommunications industry was an established regulated monopoly. But improvements in technology and reductions in costs have ripped apart the premises of natural monopoly and the economic rationale for public utility regulation. The authors review past US telecommunications policy and question the assumptions of the current search for a policy for the future. They believe that, for the industry to develop, institutions and restraints need to be removed.     

Telecommunications pricing and consumer expectations : The case of alternate operator services

Traditional discussions of telecommunications pricing utilize microeconomic models that are often timeless. In reality, static models of price-based decision making in telecommunications do not capture an important reality: that the price feedback is substantially delayed. Since consumers have no immediate feedback on which to base rational decisions, they must utilize their expectations of price. This article analyses the implications of this, using the alternate operator services as a discussion case. This analysis shows that few alternatives beyond price regulation exist to resolve the rampant complaints in this industry.     

On the determinants of non-market strategy: The separations mechanism and cost shifting in the telecommunications industry

This study examines the relationship between performance levels and the levels of cross-subsidy attained by local exchange carriers in the United States telecommunications industry. These cross-subsidies have been obtained by firms via their engagement in a separations mechanism, based on a cost allocation process, which telecommunications sector regulatory authorities use. Non-market strategies have assumed primacy in the activities of several sectors world-wide. Thus, understanding non-market strategic choices is important in the analysis of firms’ behavior and performance. Active engagement in the separations process is an important non-market strategy in the telecommunications industry, as a firm relatively successful in this activity can gain large cross-subsidies. The analysis establishes that less profitable firms obtain greater cross-subsidies. Once the profitability variable is decomposed into its two main components, which are productivity and price recovery, the impact of the profitability variable reduces. Firms which are relatively unproductive, as well as those unable to recover higher output prices, obtain relatively greater cross-subsidies. These results are inconsistent with the postulates of the strategic cost-allocation and behavior literatures but are consistent with x-inefficiency and rent-seeking perspectives of firms’ strategic actions.     

Employment dynamics in the Italian telecommunications industry

Important quantitative and qualitative changes are affecting employment in the telecommunications manufacturing and services industry worldwide, namely the selective downsizing of employment stocks, the reshaping of job contents and employment composition, and the adoption of innovative labour practices. By resorting to micro-data from the archives of the Italian Institute for Social Security, the paper outlines employment dynamics in the Italian telecommunications industry between 1986 and 1995. Most notable changes detected for public telecommunications operators include the acceleration of inter-companies labour flows and the development of an external labour market for higher skilled employees. However, personnel policies to protect the holders of less tradable skills still exist.     

Telecommunications in the land of the Thunder Dragon: recent developments in Bhutan

This paper charts the development of telecommunications in Bhutan. Since the introduction of telecommunications services in 1963 Bhutan has faced many challenges as it has sought to roll out a network that covers the whole population and country. A small population, a mountainous geography, a transitional economy and a unique approach to development—Gross National Happiness—present many challenges that need to be overcome if the telecommunications industry is to develop further. Added to this is the decision of Bhutan to join the outside world through membership of the ITU, APT and WTO that has added liberalisation and privatisation to the challenges faced by Bhutan. This paper identifies two broad policy options that Bhutan could adopt—network expansion nationally or investment concentration towards urban areas. The authors conclude that due to the limited resources available to Bhutan these policies are contradictory and will take the telecommunications industry in quite different directions if adopted.     

Churn analysis for an Iranian mobile operator

To survive in the challenging environment of a global market, organizations must recognize and analyze customer attitudes. To be competitive, organizations must recognize and forecast customer preferences and behaviors to maximize customer retention before their rivals do so. This research identifies factors that affect customer churn, the single most valuable of an organization's assets. One year's data from call log files relating to 3150 customers were selected randomly from an Iranian mobile operator call-center database. Binomial Logistic Regression was the method of analysis used in this research. The results of this research indicate that a customer's dissatisfaction, their amount of service usage and certain demographic characteristics have the most influence on their decision to remain or churn. The results also imply that customer status (active or inactive status) mediates the relationship between churn and the cause of churn. The Iranian government's current plan to privatize the telecommunications industry without deregulation leads to a non-square competition environment. Deregulation in favor of delegating more authorities of customer care is necessary in order to develop a square private competition environment in the Iranian mobile telecommunications industry.     

A pan-European telecommunications regulator?

Creating a single telecommunications market in the European Union is well under way, particularly with the approach of full competition after 1 January 1998. However, the regulatory framework needs to reflect the demands of the single market and the needs of industry. The European Commission has been reviewing whether a single pan-European telecommunications regulator would offer a valuable focus in streamlining the existing regulatory structure. In so doing, they commissioned Denton Hall and NERA to evaluate the needs of industry and the legal and practical approaches to the creation of a single regulator.